3 More Big Swing Trade Stocks to Buy Immediately
Tom Yeung here with your Sunday Digest.
Last week, I showed you three swing trade stocks to buy immediately.
A system co-designed by TradeSmith Senior Analyst Jeff Clark was sounding the alarm over volatility, creating a golden opportunity to buy gyrating stocks. With this insight, I used another TradeSmith quantitative system to identify those three stocks to buy.
We’re already seeing Jeff’s predictions come true.
On Wednesday, the VIX index spiked 12% after a better-than-expected auction for 10-year notes raised fears of a stock market selloff. (Stocks and bond prices tend to move in opposite directions.)
Then on Thursday, Wall Street’s “fear gauge” surged another 14% after geopolitical unrest in the Middle East.
Our three swing trades have also done reasonably well, with one even rising 4% relative to the flatlining of the S&P 500.
Now, I know some of you might have missed Jeff’s Countdown to Chaos broadcast earlier this week. In the free hour-long presentation, he explains how he predicted the spike in volatility, why he believes it will continue, and what you can do to profit from it.
Jeff also shares the strategy he deploys in these kinds of markets. It’s led his subscribers to 19 winning trades out of 23 in his newsletters since April 2.
But if you’re interested in watching a replay of the event, you should know time is running out. The presentation will be taken down tomorrow, so I urge you to tune in while you can. All you have to do is click here.
In it, Jeff discusses why volatility should keep rising and how you can come out unscathed – and even profit – in roiling markets.
In the meantime, I’d like to offer three more swing trade stocks that one of TradeSmith’s quantitative systems has flagged to buy. These companies continue to highlight just how important volatility is for making abnormal profits, and why having a system that identifies these breakouts is so essential.
Let’s jump in…
Riding the Tariff Panic
The riskiest of our quantitative system’s picks this week is Lululemon Athletica Inc. (LULU), an “athleisure” retailer that has been hammered by the fallout of “Liberation Day” tariffs.
The apparel company outsources virtually all its production to East Asia, and investors are rightly worried that President Donald Trump could blow up the firm’s profits if trade deals fail to materialize.
Many of these fears were confirmed during LULU’s first-quarter earnings call on June 5, where CEO Calvin McDonald warned of “additional expenses related to tariffs.” Management trimmed full-year earnings guidance by 2%, sending shares down 22%.
LULU’s stock has now collapsed 35% this year.
However, our corporate partner’s quantitative system believes the selloff has now gone too far.
Following the June 5 slump, Lululemon now trades at just 17 times forward earnings – 40% below its historic averages and lower than at any point since March 2009. Analysts have also not cut their earnings expectations by as much as guidance, suggesting that LULU’s management might be sandbagging.
We’re already seeing some evidence that proves those analysts right. On Wednesday, the U.S. and China agreed to roll back tariffs on each other, suggesting that similar deals with other LULU-supplying countries might happen soon.
U.S. consumer mood is also beginning to rebound. On Friday, the University of Michigan said that its U.S. Consumer Sentiment Index jumped to 60.5, from an earlier reading of 52.2.
Both are positive for Lululemon, which has historically been sensitive to consumer sentiment. Few consumers want to buy $118 yoga pants or $58 summer bucket hats when they’re fearful of the future.
On the other hand, Lululemon is often the first “affordable luxury” that customers splurge on once confidence returns. A similar rebound in 2021 saw shares rise 40%
For now, TradeSmith’s quantitative system forecasts an 11% upside over the next 30 days. Though tariffs remain a major risk, our quant system believes markets have now taken that truth too far.
The Medium-Term Play
The next pick is a firm that everyone knows, yet no one thinks about. After all, their bright red lawnmowers are so ubiquitous that it’s easy to look right past them on a warm summer day.
The company in question is The Toro Co. (TTC), a 110-year-old Minneapolis area-based firm that produces everything from augers to irrigation systems. The company owns brands including Boss (snowplows), Ditch Witch (construction equipment), Lawn Genie (irrigation), and, of course, Toro (lawnmowers and more).
Over the past year, shares of this blue-chip firm have dropped 30% on slowing revenue growth and shrinking margins. The residential market for mowers and power products has collapsed bh double digits, and growth in the professional segment has not been enough to offset the decline.
However, much like the selloff at Lululemon, the one at Toro has now likely gone too far. The company’s shares now trade at a bargain-bin 16.5X forward (depressed) earnings, and we haven’t seen Toro trade for these low levels since 2012.
Our partner’s quantitative system is forecasting a turnaround. Over the next 30 days, it’s forecasting a 10% increase in share prices – a healthy rebound. More upside could follow as consumer confidence rebounds.
In the shortterm, management at The Home Depot Inc. (HD) and Lowe’s Cos. Inc. (LOW) both struck positive notes during their most recent earnings calls. The retail-focused home improvement stores reiterated their full-year guidance, and one even called American consumers “very healthy.” Both companies are a good leading indicator for Toro’s retail demand.
Rising volatility might also tempt investors back into more stable companies. Toro has survived 110 years of droughts, depressions, and wars. The firm has wide margins, strong brands, and excellent distribution networks that suggest it will survive at least 110 more.
The Underpriced Stalwart
Earlier last week, I fired up this quantitative system to find its No. 1 pick.
Ordinarily, I would expect a small- or medium-cap stock to come out on top. These firms start from far smaller bases, so a $10 billion gain in market capitalization might mean a 10%… 20%… even a 100% gain in share price. Every early-stage investor knows it’s easier to find a 10X winner by investing in startups than in mature firms.
But the quantitative system had a surprise for me:
Alphabet Inc. (GOOG)
The $2 trillion company was named the system’s No. 1 pick to buy for the next 30 days, with a projected upside of 17.5%. Even with a downgrade on Friday, the system still forecasts an 8% upside to $190 over the next 30 days.
Now, there’s no guarantee this will happen. No algorithm can predict the future with 100% accuracy, and even our system concedes it’s wrong 28% of the time on this stock.
But a 72% win rate is nothing short of phenomenal. And there’s good reason to buy Alphabet for both the near-term upside and its longer-term value.
Alphabet is an aggregation of some of the world’s top businesses. Google dominates in search engines, where it has a 90% market share, and the company has stellar operations in cloud computing, streaming services, mobile operating systems, and more.
It is the modern-day version of what conglomerates in the 1980s once aspired to be.
The firm is also a leader in cutting-edge technologies:
- Quantum computing. The company’s Willow chips are roughly a decade ahead of rivals like Amazon.com Inc.’s (AMZN) Ocelot and Microsoft Corp.’s (MSFT) Majorana 1 chips. They use “transmon qubits,” which have become the workhorse of quantum computing.
- Self-driving cars. Subsidiary Waymo now operates more than 1,500 autonomous vehicles across multiple cities, with plans to add another 2,000 to its fleet by 2026. They have been the undisputed leader in the business since General Motors Co. (GM) pulled the plug on its Cruise robotaxi project late last year.
- Artificial intelligence. Google’s Gemini 2.5 Pro model is currently considered tied with OpenAI as the best large language model (LLM) in the world
It’s important to note that two factors have kept prices subdued in recent months.
- Conglomerate discount. Alphabet trades at just 18.5 times forward earnings – well below the median 31.6X of the other “Magnificent 7” stocks, and even 2% below the median S&P 500 firm.
- Antitrust lawsuits. Google has recently faced several antitrust cases on search, app downloads, and advertising. That’s created pressure on share prices.
However, TradeSmith’s system is projecting that both of those headwinds may become less important in the coming weeks.
Regarding the conglomerate discount, Google’s AI-focused cloud business is quickly turning the firm’s diversified businesses into one with a common theme. (Previously, its “other bets” businesses had little in common with its core advertising business.)
That’s making Alphabet far more like Berkshire Hathaway Inc. (BRK) and The Walt Disney Co. (DIS) – conglomerates that trade at a premium thanks to the benefits created between departments.
As for lawsuits, sudden improvements in AI are moving Google’s core value away from the monopolistic businesses the federal government is trying to “bust.” The Google Ad Network business is worth roughly $90 billion, which is now less than 5% of Alphabet’s total worth, according to Morningstar. Meanwhile, Apple’s use of Google as a default search engine – the focus of one of the federal lawsuits – is worth just $20 billion annually, or 13% of product costs.
Though Alphabet’s rise might take the longest to play out because of its enormous starting size, it’s also one that short-term swing traders and long-term investors will agree on.
The Coming Age of Chaos
Many of you will take a road trip this summer. And if your family’s anything like mine, the “Are we there yet?” chorus will begin about one hour into a 10-hour drive.
That’s 10% of the way there.
Coincidentally, another journey is about 10% through:
Donald Trump’s second term as president.
As of today, we’re 146 days into a 1,461-day term that began on January 20, 2025.
In other words, we’ve still got a long trip ahead of us.
That’s exactly why swing traders should pay attention. We’ve only just begun to see the dramatic policy shifts, geopolitical uncertainty, and regulatory reversals that were hallmarks of Trump’s first term.
It’s also why I urge you to take advantage of your last chance to watch Jeff Clark’s Countdown to Chaos event before our publisher takes it down Monday at midnight. During the free broadcast, he covers one of the most important strategies investors can use to protect themselves from volatility, and even profit from it.
Check it out here.
Financial pundits have long noted that risk and reward go hand in hand. So, if risk is going up, your returns might as well too.
Until next week,
Thomas Yeung, CFA
Market Analyst, InvestorPlace
Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.
The post 3 More Big Swing Trade Stocks to Buy Immediately appeared first on InvestorPlace.
